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What is cross-border eCommerce – Understanding the benefits and challenges!


November 24, 2020
6 MIN READ
Vinculum
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Vinculum
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Amazon made us look at the online market in a different way. But it isn’t the only company to have transformed the eCommerce landscape in global eCommerce history. Since 1994, Bezos founded Amazon in Seattle, Washington, USA, companies like PayPal, Alibaba, Taobao, Facebook along with the launching of Google AdWords and Facebook Ads paved the path at each pivotal points of this transformation.

What is cross border eCommerce?

Cross-border eCommerce is the practice of trading online beyond a nation or continent’s geographical boundaries. It may happen between a business and a consumer (B2C), between two businesses (B2B) or between two private persons (C2C).

Though Cross border eCommerce has evolved over the last two and half decades, in the last two years, cross-border eCommerce has gained huge momentum as customer’s purchasing habits have been changed. Most of the customers prefer buying products from outside their borders. There are many reasons to it. One of the biggest is – it’s cheaper when they buy a product directly from their source of origin.

Research by Bloomberg says that the worth of China’s cross-border eCommerce is $60 billion. And with this increased income, the demand for imported goods has also been increased. Cross border purchases have been growing in France as well in a very fast pace. Nearly 50% of all French consumers started buying from cross-border merchants.

Why Global Expansion is a must for Online Sellers?

Cross-border eCommerce is not a new trend. It has developed rapidly due to the increasing interest in people to buy goods from outside the borders and budding eCommerce platforms. While, platforms like Amazon and eBay have taken this to a step forward with advanced selling options, one can take the most efficient approach to cross-border selling if they add new marketplaces within their existing selling platforms.

Amazon has launched couple of more countries and still in counting mode. To learn more about Selling in International Marketplaces through Amazon, read our previous write up.

Recently, Statista interviewed US shoppers where 27% said they shop both within and cross-border while for Austrian Shoppers, the number increased to 71%. The stats are clear indications to an opportunity for both the brands and the sellers to sell their products to the global market.

Challenges and Solutions

Cross-border selling of course is an effective way for the sellers and retailers to boost sales and revenue. However, introducing any product to the international market brings challenges. From product return handling to clearing customs and overseas shipping – if you can’t serve your customer post selling, you would not make a trustworthy brand or dealership. Understanding the demand of the product is the key to it. Here are some easy hacks that will guide you before you decide going for cross-border eCommerce.

Clear customs everywhere

Customs Clearance is the most important factor when you try selling your goods outside the borders of your country or continent. Every country has their own rules and regulations of trading, selling or buying products. Brexit negotiations can make a huge impact on eCommerce sales between consumers from United Kingdom and merchants from the European Union.

Despite long-standing ties, a “hard” Brexit can add additional costs and bring complexities to transactions between them. No matter how good products you sell, if you don’t know custom regulations very well. Learning customs and regulations may take up to weeks.

However, every challenge has a solution. There are shipping services available like DHL, UPS or FedEx etc. that are well versed in customs clearance. They give you a full time and end-to-end service for shipping around the world. It would save a lot of your time and money. Gradually, you can keep learning the rules to make more profits.

Keep track on the demand of the product you want to sell

Starting your cross border business without knowing the existing trend and demands of the local people living in the country would be a huge mistake. Investing in market research will help your business grow. Identifying whether people in other countries will buy your product is very crucial before you start expanding your business cross-border.

A plethora of market and consumer data is available online which are free for your access and they are relevant too. Cross check the relevance of the data of the demand for a product using by keyword research and search engines. Google Trends, a very helpful online tool, lists, shoppers’ e-commerce searches, trending topics and other data for different geographic regions as well as for individual countries. It gives you relevant data as well.

Give your customers an enhanced experience with hassle-free overseas shipping and returns

Today is the world of customers. They expect the same speed, transparency and certainty in their business interactions, no matter how much money they are spending. Once you make your mind for trading on global and local market places, there come many questions in your mind. Just like customs-based clearance, the fulfillment services like handling import fees, returns of products. Retailers selling cross borders can also use third-party shipping services for the same reason. DHL, FedEx, or UPS doesn’t only help in custom based clearance but also equally take care of duties and tariffs while ensuring smooth handling of product returns.

Acquaint yourself with payment methods and processing in different countries

A robust payment system is thus necessary for your eCommerce business. Preferred payment methods vary from country to country.

  • 100% of eCommerce payments in Spain are done by either Visa, MasterCard or American Express.
  • Roughly around 75% of people who shop online in Japan use Konbini.
  • Even in France 60% of shoppers use a Visa, MasterCard or American Express to buy products online.
  • Germany, the economically strongest country in the EU has very few online shoppers who use credit cards (Visa, MasterCard, or American Express).
  • India mostly runs on cash. Most of the shopper in India does the research online, while buying the item they want, pays for it with cash once it arrives on their doorstep. However, there is a couple of other payment modes that is used in this country such as credit cards, debit cards, UPI payments, etc. due to the current pandemic situation.

On the other hand, payment methods like PayPal are also an easy option for your overseas buyers. You will have to adapt these payment methods and mechanisms to the country norms as you do your eCommerce business.

Currency is another challenge you may face as there is no global currency or universal way of paying. This makes it more complicated when you think about currency values fluctuation from time to time. One more money challenge is foreign tax. Cross-border eCommerce is a growth strategy for any eCommerce business. To achieve success, it will need you to invest a lot initially, as it happens for your Amazon FBA pricing. Prepare yourself for all such challenges when you make your mind to global expansion.

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